"It's in our best interest to put some of the old rules outside and create new ones, and follow the consumer - what the consumer wants and where the consumer wants to go"

- Robert Iger, Chairman and CEO, Walt Disney Company.

In her three-year tenure as the Chairman of the country's largest bank, the State Bank of India, Arundhati Bhattacharya seemed to be following in the footsteps of Iger - rewriting the rules of the over two-century-old establishment to serve its existing customers and win over new ones.

Like Iger, who inherited a shrinking business in the mid-2000s, Bhattacharya's entry into the South Mumbai headquarter of the bank was no different. She assumed the role of the Chairman at a time when the economy was slowing down, asset quality was deteriorating, resolution of bad assets was moving nowhere and there was no hope of credit offtake because of an over-leveraged corporate sector.

The three-year stint at the helm has perhaps been too short to make a significant difference to a large entity like SBI, but Bhattacharya surely managed to lay down a solid foundation for growth. She started by setting six strategic goals - digital, technology, improving delivery standards, cost reduction, NPA reduction and risk management - and ensured the bank made considerable progress on all fronts. Given the constraints and challenges, her performance, therefore, was on the top of the mind of the jury when they selected her as the banker of the year.

Bhattacharya's hands-on approach with digital initiatives, such as mobile apps for retail, SME and corporate customers, was well received. So were her efforts to promote digital-only branches - a one-of-its-kind initiative in the Indian banking industry - and artificial intelligence and robotics for credit analysis, risk management and better customer service. She is positioning the bank as 'the banker to digital India'.

"We will be seeing some of the implementations happening in the next six months," she says. The digital journey, in her own words, is actually an ongoing effort. In fact, it is just the beginning. "The bank will begin to look different in a year or so. In the next 12-18 months, you will see us doing lot many more delivery in the areas of artificial intelligence and robotics," she adds. Bhattacharya's extended one year tenure as SBI chief will end in October.

Under her stewardship, the bank has also been working on improving customer relations, increasing the value of accounts and improving processes. "There will be a lot of centralisation of processes and, subsequently, the branches will be reoriented towards advising rather than merely giving small-value services," says Bhattacharya, adding that a customer experience excellence project (CEEP) has been rolled out in 3,000-plus branches for better crowd management and faster processing time for transactions.

She has also started a training programme for employees and launched a new HR initiative to encourage meritocracy and cut down on subjective evaluation of employees. Under the new system, 65 per cent marks will be based on performance, which will include specific targets, 5 per cent marks will be given to those who successfully complete the training programme and remaining 30 per cent markings will be reviewed by the supervisor. "We have put together a system which clearly reflects the performance and 87 per cent of the roles have been made budgetary," she says. The bank is also focusing on specialisation, which would help in the long run.

Bhattacharya is also making a good beginning towards the less-cash society. She has, in fact, been one of the voices in support of demonetisation. "She has led the transformation of SBI as a modern-age bank. She has been articulating the critical issues impacting the banking industry. In fact, she is an acknowledged voice of the banking industry at all forums," says Birendra Kumar, MD and CEO, International Asset Reconstruction Company.

She has also done her bit in exploiting the digital opportunity, deploying over 300,000 point-of-sale machines - growth of over 50 per cent in just one year. Not many know that POS is a loss-making business as charges are shared with the card-issuing bank, payment processors, such as VISA or Mastercard, and switching company NPCI. "We have to change it into a business that would yield decent profits," says Bhattacharya.

She says innovation in the POS ecosystem will accelerate deployment of these machines. SBI, in fact, is testing an android-based smartphone with an attached dongle that can operate like a PoS system, and Bhattacharya is hopeful that there will be many more innovations that would promote digital payments.

On cyber security, Bhattacharya says each player has to be very vigilant. "The cyber criminal innovates on a daily basis. The regulator probably needs to start looking at what each player is doing, so that if there is some oversight, everyone is prepared to face any emerging threat," the SBI chief says, adding: "We will also see a lot of work being done in fraud analysis and determining potential of various initiatives."

The area of concern for Bhattacharya, however, is the deteriorating asset quality, which have reached almost `1 lakh crore in 2015/16. The mid-corporate segment has seen highest gross NPAs at 17.12 per cent followed by SMEs at 7.82 per cent and 6.93 per cent in agri loans. "SBI is highly levered to macro economic conditions, and improvement in investment climate and interest rates would assuage asset quality fears," says a recent Motilal Oswal report.

In fact, when Bhattacharya moved to the corner room, the agri NPAs were in double digits. "Agri is not easy to manage," admits Bhattacharya. But she hopes that awareness about crop insurance is gradually increasing among farmers. "That will give some stability to agri lending," she says, adding a lot needs to be done in terms of technology, investments in logistics, food processing, etc. "Today, a huge amount of produce gets wasted because of lack of cold chains and processing units."

In 2014, the SBI shed some of its NPAs to ARCs with the hope that they will be able to do a better job with the bad assets. But Bhatta-charya is a bit disappointed. "In India, many of these assets are still working assets. The replacement costs are much more than what the ARCs are giving us," she says. Similarly, strategic debt restructuring (SDR), a resolution tool provided by the Reserve Bank of India, has not been very helpful either. "We have not seen too many people coming. Those who came, backed out at the last minute," says Bhattacharya, adding that very few companies would fit into the stringent norms provided by the RBI. "As a result we are not being able to do too much with it." However, she is confident of finding a solution to the problem.

Bhattacharya is also eyeing other business opportunities, including cross selling and forex trade. "We have a huge branch network that can be utilised for cross selling, besides there is a huge FII population to tap." The bank is also trying to shore up its return on capital employed, which is at 7.30 per cent. In comparison, HDFC Bank has an ROCE of 18.26 per cent. SBI's capital adequacy ratio is comfortable at 13.12 per cent, but also needs to be beefed up for meeting the growth requirement as and when the economy bounces back. Finally, the recent merger with five associate banks is likely to keep her occupied with a good part of her remaining tenure. Surely, she can learn a lesson or two from Iger whose daring deal making skills transformed Disney. ~